How to Make Your Spouse a Legal Business Partner in Property

By David Carnes

It is possible to add your spouse as a legal business partner -- in fact, this happens automatically under state law as soon as you agree with your spouse to do business together and to share profits and losses, even if your agreement is only verbal. You must, however, actually be doing business -- merely owning property as husband and wife is not enough to form a legal partnership, although it may confer joint ownership. Although you do not have to execute a written partnership agreement, a partnership agreement is critical to avoiding disputes.

Step 1

Select a legal name for your partnership and perform a name availability search using the search function on the website of your state's Secretary of State. Some states require the legal name of a partnership to be the last names of the partners -- for example, "Cramer & Cramer."

Step 2

Select a fictitious business name, perform a name availability search and register your fictitious name, if you wish your partnership to be known under a name other than your last names. Many states require you to notify the state government of your fictitious business name, and others allow you to register a fictitious business name even though it is not mandatory. Registration will prevent another in-state business from using your name.

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Step 3

Draft a partnership agreement in duplicate, sign both copies and have your spouse sign them. You don't have to file your partnership agreement with any state or federal agency. The partnership agreement should cover your respective capital contributions to the partnership, profit and loss sharing, voting rights, management rights and responsibilities, entry and exit of partners and dispute resolution procedures. Because a two-person partnership faces a tie vote every time the partners disagree, a comprehensive partnership agreement is the most effective way to resolve disagreements.

Step 4

Amend any title documents representing property that you want the partnership to own so that it lists the legal name of the partnership as the owner. If the partnership will own real estate, for example, have the county land recorder's office reissue the title deed. Use a quitclaim deed to relieve the previous owner of potential liability in case of unrecorded mortgages or competing claims to title.

Step 5

Register as a limited partnership with your state government, if you want one partner to enjoy limited liability for partnership debts. To register you must complete a short registration form and pay the state filing fee. The registration form asks for the name and address of the partnership, the name and address of a legal representative, and the name and address of the general partner. Designate either yourself or your spouse as the limited partner in the registration form. The limited partner may not take an active role in operating the business.

Step 6

Apply for any business licenses necessary to do business in your state or locality. A real estate partnership, for example, may require state licensing of the partnership itself, even if the partners are already licensed realtors.

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How to Change Ownership From a Proprietorship to a Partnership



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